Graduate Tax – A better alternative to tuition fees?

The National Union of Students (NUS) has published a blueprint that suggests setting up a People’s Trust for Higher Education.  It is, they say, “A fund built mainly on contributions by former undergraduate students and their employers, and the employers of current students”.

NUS Blueprint

Rather than ramp up fees, lift caps and get universities charging different fees, the NUS blueprint asks for a form of graduate tax that would be paid over a fixed period of 20 years, based on your earnings.  The more you earn, the more you pay back.  This has been suggested as a reasonable alternative to implementing higher and variable fees.  In fact, it’s designed to abolish fees completely.

This blueprint has been written to stimulate public debate, rather than answer every question, rather than prove a solution to every problem, rather than explain a perfect system.

That said, it is still a clear set of proposals aimed at creating a fair system for all and encouraging widening participation.

The NUS state:

“Our proposals would end the very notion of a course fee or price, and shut the door on a market in fees. Graduates should contribute to the future costs of higher education according to their actual future earnings, so that those who benefit the most from university by earning more will contribute more, in order to give future students access to higher education.”

However, Nick Taylor brings up a valid point that the NUS suggestions could be “Funding Our Failures”.  He asks us on his blog to “think of an alternative that doesn’t persecute successful students and reward idiots”.

Taylor’s blog post asks a reasonable question, especially as the NUS blueprint specifically states, “Those who leave higher education and, for whatever reason, have only a very low income for the rest of their working lives, may pay nothing at all, and will have relatively little debt compared to today.”

Problem areas like this do need to be addressed, otherwise the system is open to abuse.  It is, therefore, up to us to contribute further to help introduce a system that works for all.  The NUS brings us closer to a way of funding HE using methods other than charging sky-high fees.  So now we have a more detailed, greater supported and generally talked about platform to work from and mould into shape.

Although an open statement, the NUS blueprint also starts to talk about the future of HE given the likely boost in revenue that’s been calculated.  They call for the funding to:

“be conditional on new measures to monitor and improve the quality of the student experience and the impact of higher expenditure in the higher education sector. We believe this should be focused on the outcomes of higher education and the extent to which it actually changes people’s lives.”

If widening participation is truly being taken seriously by the government, it should be made clear to all that HE can change people’s lives for the better and that it’s worth being a part of.  There will always be the ‘Wasters’ that Nick Taylor refers to, but I believe more can be done to persuade these individuals that they can achieve more to the benefit of themselves and others.  It won’t work for everyone, but this new blueprint should go beyond the debate of graduate tax versus student fees and look to the way in which individuals can be encouraged to make the most of their time within HE.  University looks like a laugh because it really can be a laugh.  That doesn’t stop it from being a positive and rewarding move in life at the same time.

Finally, the blueprint opens the way for better support of lifelong learning (which is something I’m all for).  The graduate tax would be related to the number of credits that people have studied.  That allows people to move in and out of HE in different ways and benefit without being hit with huge fees, just for trying to gain more education.  A graduate tax would still need to be paid, but in such a way to allow greater access and better participation.

I am pleased to see today’s blueprint and hope for a wider debate within HE because of it.  While we may not have all the answers right now, we’re certainly a lot closer to finding an effective and fair system of funding higher education.  Now it’s up to us to get working on filling in the cracks and building a system that works for as many people as possible.

The more of us who get involved, the easier that should be.  Let’s do it!

Related Links:
The Guardian – Wes Streeting (President, NUS) on the blueprint

The Guardian’s own take on the graduate tax

BBC News

24dash

Compass Online

Metro

Times Online

University and College Union (UCU) response to the blueprint

Million+ response to the blueprint

The Guardian has put up a voting and commenting page about “Graduate Tax vs Tuition Fees“.  Be sure to watch the comments both for and against!

6 comments

  1. I think this is a bad idea. Charging people a tax based on their income for becoming a graduate seems like it would encourage particularly motivated people to simply skip graduation in order to gain the knowledge without the tax. Further, it seems like it would be better to get all of your payments out of the way up front (even if it is rolled into a student loan) than create a new way of taxing people that may increase in the future.

    1. Many thanks for your comment, Mark.

      Higher Education, as it currently stands, results in a large number of students signing up specifically in order to get a degree at the end of it. Without that piece of paper, the learning might as well have been worth nothing.

      While not everyone goes to uni to improve their CV, I can’t imagine more than an insignificant proportion of students dropping out at the end just to miss out on paying a graduate tax, even if they studied *solely* to learn. This would be especially true what with taxes only kicking in when people are earning over £15,000 (around $24-25k at time of writing). Even then, the tax would be minimal, as it increases only as earning increase.

      In terms of getting payments out of the way up front, that’s the current way of doing it. Student loans pay the fees and graduates pay back each month (again, once earning a suitable salary). However, with the possibility of large hikes in fees coming up, as well as variable fees on the horizon (not even considering the possibility of higher interest rates…), there’s a danger that loans would not be repayable by many. Those who could not repay would forever have a large debt looming over them with no way of getting rid of it.

      With high debts, high interest rates, and high prices to pay, the chances of increasing widening participation succeeding are slim. Yes, there are concerns regarding the NUS Blueprint as it stands…for instance, some students could go to university for a laugh, to waste a bit of time and mess around. These students may finish uni without graduating, and thus not paying the tax; the danger you outline in your comment. Alternatively, they could graduate and pay very little, if any, back in tax over the years (perhaps resulting in high-earners paying for these students based on their large contributions).

      Despite the concerns, I believe the NUS Blueprint is a worthy alternative to the current fees system. If a better alternative to a graduate tax is suggested, I’ll be just as excited to champion that. And the more discussion there is regarding funding HE, the better we should find a system that is reasonable and fair for all. As it stands, I don’t like the idea that fees could epically rise and damage both widening participation and the state of HE in the UK. Both things deserve better.

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